G-20 Must Avoid Devaluation `Spiral,' EU's Rehn Says

Group of 20 nations must avoid a
downward “spiral” of competitive devaluations of their
currencies, said Olli Rehn, European Union Economic and Monetary
Affairs Commissioner.

“The main issue of this G-20 is to agree on a policy on
the coordination and rebalancing of global growth,” Rehn said
today in Gyeongju, South Korea. “We’re at a critical juncture
where there is a danger of non-cooperative action that risks
derailing global growth. We need effective policy coordination,
not unilateral action.”

“That means that exchange rates that are in line with the
different positions of the world’s economies, it means strong
currencies in strong economies, not weak currencies in strong
economies,” Reynders said in Gyeongju, where finance ministers
and central bankers are meeting. “Balanced currencies should
reflect the situation of global growth.”

Rehn said exchange rates are a major issue in the
rebalancing of global growth.

“What we can agree is to avoid a spiral of competitive
devaluation,” he said.